What happens to my two Bitcoins (just for example) if I lose my security key? I do not have any Bitcoin at the moment. But, I am quickly learning about Bitcoin as I want to very soon make my very first purchase of some amount of it. My question has to do with there being a finite amount of Bitcoin in circulation. Today about 17,000,000 (17 million) Bitcoins are in existence. By year 2140 as I understand it there will be no more than 21,000,000 (21 million) Bitcoins in existence. Furthermore, my understanding is that I am the only person with access to my Bitcoin through my private security key. Now, my question is. If I lose my security key to, let's say, one of my Bitcoin wallets that has maybe 2 Bitcoin in it. Then, what happens to that 2 Bitcoin in the context of the 17 million Bitcoin currently in existence. Who can find and use those 2 Bitcoin that I "lost". Or, do those 2 Bitcoin get lost forever, because I'm presuming no one ever will find/guess my lost security key? An analogy is, if I lose a hundred dollar bill, someone will likely find it and be able to use it to put it back into market circulation. However, if the hundred dollar bill gets flushed down a sewer drain, then it gets permanently removed from market circulation. So, I'm wondering, do the 2 Bitcoins in my example that I "lost", do they permanently get removed from market circulation. And, if so, then does that mean that in 2140 there will be 2 Bitcoins fewer in the total market circulating, for example, 21,000,000-2 would make it 20,999,998 Bitcoins in circulation. Or, can those 2 lost Bitcoins be *replaced* by Bitcoin mining over time so that the market has the full 21 million in circulation.
Yes. Exactly what you said. Compare the events (losing bill and private keys) and you will find all similarities. If you lose your private key, and say its written on a paper along with your public key and someone somehow guessed that its a private key, then he will be able to recover your funds. That's the same thing as losing your $100 bill. If someone finds it, he spends it. But, if say, your keys get lost forever due to corrupted hard drive and you haven't store it anywhere, then its lost forever. The same thing as burning/flushing a 100 dollar bill. But, this does not mean that the circulation will be reduced. It will still be 21 million since the coins still does exists in the chain. And no, those 2 lost bitcoin won't be replaced.